Yeah! Let's have government control the markets! That's worked so well in the past. Whoops, the oil market is int-er-nash-un-ul. That means Uncle Sam can't control it by himself. Woah, we can have the United Nations administer oil prices! What a hoot that will be. Cheap oil for Cuba (they need the help), really expensive oil for the USA (they need to walk a lot more). And boy, are they honest. Cleary the brainiacs on this board know far better what the "fair value" of oil is, compared to all the losers out there who trade tankers at a crack. WTF do we need free markets for anyway? Let's just set a fair price for stuff and that's it. Yeah. Stoopid markets. Dumb ol proper allocation of scarcity is overated. The proper allocation is what I say it is. I's a gen-e-us, and way more efficient than some stoopid free market. Or, how about we let the markets work? Either this is a fair price for oil (see peak oil whacko theories) or it's too high (see Bush plotting 9/11 to steal oil whacko theories). If this is the fair price of oil, than we'll have to adjust. Mass transit, less air travel, more bikes and sidewalks, more electric cars (and nuke plants), more drilling, etc. If it's not, then the price drops and the last bulls get gored and we turn our attention to the newest TEOTWAWKI theory. If it drops some, then the last bulls get some goring, and the world starts figuring out alternate solutions. It's not rocket science.
if we really wanted to see the spec premium in oil, the government should hold hearings with cftc about increasing margin requirements but let it come to a dead end, if oil doesn't drop 10-20% then it is either pure supply/demand or traders with steel balls.
Simple truth, criminal acts, nowhere-to-be-found government: http://seekingalpha.com/article/78264-commodities-prices-speculation-exposed
and Okay. I tend to lay it all to the weak dollar, but you two point out there are several things going on here (I do think speculators are part of it, however ---- hedging with oil against other trades). So there IS a problem with China and India coming on like gangbusters, and that raises the price of fungible oil worldwide. And supply is tight: no big problems right now with supply, but ANYTHING affects price --- I realized it was tight when a fog in the Gulf of Mexico raised prices one day this spring. So we've got a multi-cause problem: -- Weak dollar buys less oil -- Speculators -- Huge developing countries burning up oil more and ever more -- Supply tight enough that ANYthing affects it, and there's a lot of anything hanging around -- Not to mention refining issues, like not enough U.S. plants, which doesn't help Okay, I see trouble coming. American Airlines said yesterday that they had to cut a lot of flights because they were simply not organized to do business with fuel prices this high. That describes the rest of us, too --- our lives are currently organized around $2 gas and heating oil, and big things are likely to change.
Ok, but when pension funds and istitutional investions get long on mm's on oil futures contracts, through oil swaps with IB's, and the contracts never appear on the cot reports bcause of the way the swap need'nt be reported as such. Yeah, thats a fair market if I ever seen one. Anyway they can use to get around the limitation of commodidty prurchases, they will and have been using. we are awash in oil, now and in the forseeable future. there is no oil shortage. http://atimes.com/atimes/Global_Economy/JE06Dj08.html
M3 is running at 16% per year. That means 16% more dollars are sloshing around now, than 1 year ago. I'd wager that 1/2 of oils run is dollar depreciation.
All I know is that the NYMEX June crude oil futures were just below $122/bbl. when this article first came out. Just over 2 weeks later, NYMEX crude is at or near $135. I have a hard time buying the idea that "uber specs" can move a liquid market like crude oil (the cumulative open interest of all months between the July contract and the Dec. '08 is close to One Million Contracts) almost $15/bbl higher in two weeks when the market is alledgedly currently "swimming in oil" and, alledgedly, will be "swimming in oil" in the future. That's all I'm saying. Good Luck.
I think another issue may well be all the saber-rattling going on re possible war against Iran. I read yesterday that Iran has just started stockpiling oil, whether against war or to mess with the market by stockpiling against a shutdown, I don't know, but that news from the Jerusalem Post that Bush SAID he meant to attack Iran soon did precede this recent big rise. It may or may not be true he said that, but war would stop up oil in the short term, and in the long term war may be the only driver that can move us to a paradigm shift: most big technology shifts come from war, after all. Airplanes were used like balloon reconnaissance at the beginning of WWI, and by the end, they had designed and built heavy bombers, for instance. I don't think we'll switch fuel platforms until there is a big war and we have to, which might be the excuse for one in the top political circles.